The U.S. Commodity Futures Trading Commission (CFTC) and the U.S. Department of Justice filed lawsuits on Thursday against the states of Illinois, Connecticut, and Arizona, and their gaming regulators, vying for federal oversight of prediction markets. In 2025, these three states and their gaming regulators issued cease-and-desist letters to prediction market platforms such as Kalshi and Polymarket, arguing that the event contracts offered by these platforms violated state gaming laws and licensing requirements. In all three lawsuits, the CFTC maintains that it has exclusive jurisdiction over "designated contract markets," including prediction market platforms, under the Commodity Exchange Act. The lawsuit against Illinois alleges that the state gaming commission's classification of event contracts as "stakes" or "sports betting" constitutes an overreach of authority. CFTC Chairman Mike Selig stated that these overreaching actions by the states create market uncertainty and pose potential risks to market participants and registrants. Currently, 11 states have taken legal action against prediction market platforms, while lawmakers are pushing for legislation to ban sports event contracts and restrict political insiders' participation in war-related prediction markets.